Decision-Law No. (39) of 2022 Concerning the Combating of Money Laundering and Terrorist Financing

mjr.lab.pna.ps Official Gazette Office 9 Reference No.: 193-8-2022 No. 193 2022/08/14 Decision-Law No. (39) of 2022 Concerning the Combating of Money Laundering and Terrorist Financing President of the State of Palestine Chairman of the Executive Committee of the Palestine Liberation Organization Based on the Basic Law of the Palestine Liberation Organization, and the Amended Basic Law of 2003 and its amendments, After reviewing the Criminal Procedure Law No. (3) of 2001 and its amendments, and the Penal Code No. (16) of 1960 in force in the northern governorates and its amendments, and the Penal Code No. (74) of 1936 in force in the southern governorates and its amendments, and Decision-Law No. (10) of 2018 concerning Cybercrimes and its amendments, and Decision-Law No. (9) of 2010 concerning Banks and its amendments, and Decision-Law No. (42) of 2021 concerning Companies, and the Securities Law No. (12) of 2004, and the Law on the Practice of the Accounting Profession No. (9) of 2004 and its amendments, and the Law on Regular Lawyers No. (3) of 1999 and its amendments, and the Customs and Taxes Law No. (1) of 1962 and its amendments, and Law No. (1) of 2000 concerning Charitable Associations and Civil Organizations and its amendments, and the Anti-Corruption Law No. (1) of 2005 and its amendments, and Decision-Law No. (18) of 2015 concerning Combating Narcotics and Psychotropic Substances and its amendments, and the Supervision System for Dealers and Goldsmiths of Precious Metals and Gemstones to Combat Money Laundering and Terrorist Financing Crimes No. (5) of 2021, and the United Nations Convention against Transnational Organized Crime of 2000, and the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of 1988, and the four Geneva Conventions and their additional protocols, and the Convention on the Prevention and Punishment of Crimes against Internationally Protected Persons, including Diplomatic Agents of 1973, and the Convention on the Physical Protection of Nuclear Material of 1980, and the International Convention for the Suppression of Acts of Nuclear Terrorism of 2005, And based on the proposal of the Council of Ministers dated 2022/07/04, And on the powers vested in us, And in the public interest, And achieving We have issued the following Decision-Law: Chapter One Definitions and General Provisions Article (1) Definitions The words and phrases appearing in this Decision-Law shall have the meanings specified below, unless the context indicates otherwise:

State: The State of Palestine. President: The President of the State. Monetary Authority: The Palestinian Monetary Authority. Committee: The National Committee for Combating Money Laundering and Terrorist Financing established under the provisions of this Decision-Law. Unit: The Financial Intelligence Unit established under the provisions of this Decision-Law. Funds: Assets of every kind, economic resources including oil and other natural resources, property of every kind, whether tangible or intangible, movable or immaterial, physical or non-physical, however acquired, virtual assets, and documents or legal instruments of any form, including electronic or digital, evidencing ownership rights or a share or interest in such funds, and circulating currencies, foreign currencies, bank credits, traveler's checks, bank checks, payment orders, financial drafts, money transfers, shares, securities, bonds, promissory notes, financial drafts, letters of credit, and any benefit, revenue, share in profits, or any other income or value due from or derived from such funds, and any other assets that may be used to obtain funds, goods, or services. Virtual Assets: A digital representation of value that can be traded or transferred digitally, and can be used for payment or investment purposes. Virtual assets do not include the digital representation of official currencies, securities, and other financial assets covered by this Decision-Law. Virtual Asset Service Providers: Any natural or legal person who carries out one or more of the activities or operations set forth in Article (4) of this Decision-Law as a business, for or on behalf of another natural or legal person. Predicate Offense: Any offense stipulated in the prevailing Penal Codes and any other law in force in the State. Proceeds of Crime: Funds derived or obtained, directly or indirectly, in part or in whole, from the predicate offense. Dual Criminality: The criminalization of the conduct constituting the offense subject to a request for mutual legal assistance or extradition in the laws of the requesting and requested States, regardless of whether the laws of both States classify the offense under the same category or use the same terminology to name the offense. Person: A natural or legal person. Trust: Legal relationships arising inter vivos or upon death, by a person or testator, when funds have been placed under the control of a trustee or executor or custodian, independently and not forming part of the trustee's, executor's, or custodian's own assets, for the benefit of a beneficiary or for a specific purpose, such that those assets constitute funds not owned by the trustee, executor, or custodian, and the right to the trust assets remains in the name of the trustee, executor, or custodian, or in the name of another person on their behalf, who enjoys the authority to manage, use, and dispose of the assets in accordance with the trust's conditions and the specific duties and powers granted to them.

mjr.lab.pna.ps Official Gazette Office 10 Reference No.: 193-8-2022 No. 193 2022/08/14 Direct Trust: A trust clearly established by the testator or person, usually in the form of a document, such as a written trust deed. This trust differs from trusts arising through the operation of law and not resulting from the clear intention or decision of the testator or person to establish a trust or similar legal arrangements, such as trusts created by court order. Legal Arrangement: Direct trusts or any similar legal arrangements. Financial Institution: Any natural or legal person subject to the laws, regulations, and instructions in force in the State, which carries out any of the activities or operations set forth in Article (2) of this Decision-Law, whether for or on behalf of a customer. Specified Non-Financial Businesses and Professions: Anyone who carries out one or more of the works stipulated in Article (3) of this Decision-Law. Company and Trust Service Providers: Any person who provides any of the following services to other parties on a commercial basis: .1 Acting as a formation agent for legal persons. .2 Acting or arranging for another person to act as a director, secretary, or partner in a general partnership or in a similar role related to other legal persons. .3 Providing a registered office, business address, accommodation address, mailing address, or administrative address for a company, general partnership, or any other legal person or other legal arrangement. .4 Acting or arranging for another person to act as a trustee for a direct trust or performing a similar role on behalf of another person for other forms of legal arrangements. .5 Acting or arranging for another person to act as a nominee shareholder for the benefit of another person. Non-Profit Organization: Any legal person, legal arrangement, association, or civil organization that primarily operates to collect or distribute funds for charitable, religious, educational, cultural, social, solidarity, or other purposes. Transaction: Any action involving funds, including any purchase, sale, loan, mortgage, transfer, delivery, or any other action involving funds, carried out by a natural or legal person, including depositing or withdrawing funds, transferring them from one account to another, currency exchange, granting or extending credit, purchasing or selling shares, bonds, or certificates of deposit, or renting safe deposit boxes. Customer Relationship: A relationship arising between a customer and a financial institution or any of the specified non-financial businesses and professions regarding the activities, services, or products provided to them. Beneficial Owner: The natural person who ultimately owns or controls the customer and/or the natural person on whose behalf a transaction is being conducted, including the person who exercises ultimate effective control over a legal arrangement or legal person, or manages it. Bearer Negotiable Instruments: Monetary instruments in bearer form such as traveler's checks, and negotiable instruments (including checks, promissory notes, and payment orders) that are either in bearer form or payable to order, without restriction, or issued to a fictitious payee, or in any other manner that allows the transfer of rights upon delivery, and incomplete instruments including (checks, promissory notes, and payment orders) signed with the payee's name omitted.

mjr.lab.pna.ps Official Gazette Office 11 Reference No.: 193-8-2022 No. 193 2022/08/14 Instruments: Any funds or any instrument used or intended to be used, wholly or partially, for money laundering or terrorist financing, or for committing one or more predicate offenses. Provisional Attachment: A temporary prohibition on transferring, converting, disposing of, moving, or using funds, based on a decision issued by the competent court or any authority authorized under this Decision-Law, including proceeds or instruments that may have been used or intended to be used to commit an offense, or funds used or intended to be used or designated for terrorist financing, terrorist acts, or terrorist organizations, or laundered funds, and funds equivalent in value to the proceeds. Freezing: A prohibition on transferring, converting, disposing of, or moving funds, other assets, equipment, or other instruments when they are owned or controlled by persons or entities listed pursuant to relevant Security Council resolutions applicable to measures initiated by the Committee, and during the duration of those measures and decisions. Confiscation: The permanent deprivation and loss of funds, proceeds of crime, or instruments based on a judicial ruling issued by the competent court. Controlled Delivery: A method that allows illegal or suspicious shipments to leave one or more states' territories, pass through them, or enter them with the knowledge of their competent authorities and under their supervision, for the purpose of investigating an offense and identifying the persons involved in its commission. Covert Operation: An investigative method whereby a judicial police officer assumes a false identity or performs a covert or undercover role to obtain evidence or information related to the offense. Politically Exposed Person (PEP): A natural person representing any of the following categories: .1 Foreign PEP: A natural person who holds or has held a prominent public position in foreign countries, including the following positions: . Heads of State or Government. . Senior politicians. . Senior government, judicial, or military officials. . Senior executives of state-owned corporations. . Senior executives of political parties. . Other persons designated by the Committee. .2 Domestic PEP: A natural person who holds or has held a prominent public position in the State, including the positions mentioned in paragraph (1) above. .3 International Organization Official: A natural person who holds or has held a prominent position in an international organization, including: . Senior management members (directors and their deputies). . Board of directors members. . Positions equivalent to those stipulated in items (a, b) of this paragraph. Payable Account at the Source: Correspondent accounts used directly by a third party to conduct transactions on their behalf. Competent Authority: Any body or government/public authority with specific responsibilities in combating money laundering, terrorist financing, or any predicate offenses within its jurisdiction, including the Public Prosecution and judicial police officers. It also includes authorities responsible for registering legal persons, non-profit organizations, and legal arrangements under the laws and regulations in force in the State. Supervisory Authority: The authority or body entrusted by relevant laws or regulations with supervising, regulating, or monitoring the compliance of financial institutions, specified non-financial businesses and professions, and non-profit organizations with the requirements stipulated in this Decision-Law, its executive regulations, instructions, and directives. Shell Bank: A bank that has no physical presence in the country where it is established and licensed, is not part of a regulated financial group subject to unified and effective supervision by competent supervisory authorities, and the existence of a local agent or employees with low-level positions does not constitute a physical presence. Terrorist Act: Any terrorist act stipulated in the prevailing Penal Code in the State. Terrorist: Any person who commits any of the following acts: .1 Committing or attempting to commit, or participating as an accomplice in any terrorist act by any means, whether directly or indirectly, and organizing terrorist acts or directing others to commit them. .2 Contributing to terrorist acts with a group of persons acting with a common purpose, where the contribution is intentional and aimed at enhancing the terrorist act or with knowledge of the group's intention to commit any terrorist acts. Terrorist Organization: A group of terrorists who commit any of the following acts: .1 Committing or attempting to commit terrorist acts intentionally and unlawfully by any means, directly or indirectly. .2 Participating as a partner in terrorist acts. .3 Organizing or directing others to commit terrorist acts. .4 Contributing to the commission or attempt of terrorist acts with a group of persons acting with a common purpose, where the contribution is intentional, aimed at enhancing the terrorist act, or with knowledge of the group's intention to commit the terrorist act. Relevant Security Council Resolutions: Resolutions issued by the UN Security Council under Chapter VII of the UN Charter concerning combating and preventing terrorism or terrorist financing, or preventing, suppressing, and halting the proliferation or financing of weapons of mass destruction, including Resolutions (1267) of 1999, (1373) of 2001, (2253) of 2015, (1718) of 2006, (1874) of 2009, (2087) of 2013, (2094) of 2013, (2231) of 2015, (2270) of 2016, (2321) of 2016, (2356) of 2017, and all current, future, and subsequent related resolutions. Article (2) Financial Institution

mjr.lab.pna.ps Official Gazette Office 12 Reference No.: 193-8-2022 No. 193 2022/08/14 Any natural or legal person who carries out, as a business, any of the following activities or operations, whether for or on behalf of a customer: .1 Accepting deposits and other payable funds from the public, including private banking services. .2 Lending. .3 Financial leasing. .4 Money or value transfer services. .5 Issuing and managing means of payment. .6 Financial guarantees and commitments. .7 Dealing in: . Money market instruments such as checks, promissory notes, certificates of deposit, financial derivatives, etc. . Foreign exchange. . Exchange rate and interest rate instruments and indices. . Transferable securities. . Trading in commodity futures and futures contracts. .8 Participation in issues of securities and providing financial services related to such issues. .9 Portfolio management. 10 Safekeeping and administering cash or liquid securities on behalf of others. 11 Otherwise investing, managing, or administering funds or money on behalf of others. 12 Insurance and underwriting life insurance and other types of insurance linked to investment and guaranteeing them, also including insurance commitments, agents, and brokers. 13 Money or currency changing. 14 Any other activities or operations determined by the Committee in consultation with the Supervisory Authority. Article (3) Specified Non-Financial Businesses and Professions Specified non-financial businesses and professions refer to any of the following: .1 Real estate agents and brokers when concluding transactions on behalf of their customers concerning the sale and purchase of real estate. .2 Dealers in precious metals and gemstones. .3 Lawyers, accountants, and auditors when preparing, executing, or participating in transactions on behalf of their customers, regarding the following activities: . Buying and selling real estate. . Managing customers' funds, securities, and other assets owned by the customer. . Managing bank accounts, savings accounts, or securities accounts. . Organizing subscriptions for the establishment, operation, or management of companies. . Establishing, operating, or managing legal persons or legal arrangements, and buying or selling commercial entities. .4 Company and trust service providers. .5 Any other profession or work determined by the Committee. Article (4) Virtual Asset Service Providers Anyone who carries out one or more of the following works is considered a virtual asset service provider: .1 Exchange between virtual assets and official currencies. .2 Exchange between one or more forms of virtual assets. .3 Transfer of virtual assets, where transfer in this context means executing a transaction on behalf of another natural or legal person transferring a virtual asset from one virtual asset address or account to another. .4 Safeguarding and/or managing virtual assets or instruments that enable control over virtual assets. .5 Providing financial services related to the offering and/or sale of virtual assets, and participating in those services. Article (5) Money Laundering Offense

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1. Whoever commits any of the following acts is guilty of money laundering: . Substituting or transferring funds by any person, knowing that these funds constitute proceeds of crime, for the purpose of concealing or disguising the illegal origin of these funds, or assisting a person involved in committing the predicate offense to evade the legal consequences of their actions. . Concealing or disguising the true nature, source, location, disposition, movement, ownership, or rights related to funds by any person knowing that these funds constitute proceeds of crime. . Acquiring, possessing, or using funds by any person knowing at the time of receipt that these funds are proceeds of crime. . Participating, assisting, instigating, conspiring, advising, counseling, facilitating, colluding, or attempting to commit any of the acts stipulated in this paragraph.
2. Knowledge, intent, or purpose shall be inferred from the objective and factual circumstances, and upon proving that the funds are proceeds of crime, it is not required to obtain a conviction of the person in the predicate offense.
3. Whoever commits money laundering according to the provisions of this Article and resulting from any predicate offenses, whether those offenses occurred in the State or abroad, provided that the act constitutes a predicate offense under the law in force in the country where the offense occurred and constitutes a predicate offense under the laws in force in the State.
4. The money laundering offense applies to persons who commit the predicate offense; the punishment of the perpetrator of the predicate offense does not preclude punishing them for the money laundering offense. Article (6) Terrorist Financing Offense
5. Whoever intentionally provides or collects funds from a legitimate or illegitimate source by any means, directly or indirectly, with the unlawful intention of using them wholly or partially to commit a terrorist act or by a terrorist or terrorist organization, is guilty of terrorist financing.
6. Whoever intentionally, by any means directly or indirectly, provides or collects funds from a legitimate or illegitimate source to travel to a country other than their country of residence or nationality for the purpose of committing, planning, participating, preparing, or facilitating terrorist acts, or providing or receiving training in terrorist acts, is guilty of terrorist financing.
7. Whoever also commits terrorist financing: . Attempts to commit terrorist financing. . Participates as an accomplice in any terrorist financing crime or attempt to commit it. . Organizes terrorist crimes or directs others to commit them or attempt to commit them. . Contributes to the commission or attempt of one or more terrorist financing crimes with a group of persons acting with a common purpose.
8. Knowledge or intent shall be inferred as essential elements required for the offense stipulated in this Article from the objective and factual circumstances.
9. The terrorist financing offense applies even if the terrorist act does not occur, or the funds are not actually used to carry out or attempt to carry it out, or the funds are not linked to a specific terrorist act.
10. The terrorist financing offense applies regardless of whether the country where the alleged perpetrator is located is the same country where the terrorist or terrorist organization is located, or in another country, and regardless of the country where the terrorist act occurred or will occur. Chapter Two Transparency and Obligations of Financial Institutions, Specified Non-Financial Businesses and Professions, and Non-Profit Organizations Article (7) Prohibition of Establishing and Dealing with Shell Banks

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1. The establishment or operation of a shell bank in the State is prohibited.
2. Financial institutions are prohibited from doing the following: . Entering into or continuing customer relationships or transactions with shell banks. . Entering into or continuing correspondent banking business, transactions, or any customer relationships with shell banks or allowing them to use their accounts.
3. Financial institutions must ensure that responding institutions do not allow shell banks to use their accounts. Article (8) Transparency of Legal Persons and Legal Arrangements
4. Competent authorities entrusted with registering legal persons, non-profit organizations, and legal arrangements must comply with the following: . Ensure sufficient transparency regarding the beneficial owner of legal persons, non-profit organizations, and legal arrangements that can be established in the State. . Keep adequate, accurate, and updated basic information and information related to legal ownership and beneficial ownership and control structure of legal persons established in the State. . Enable the Unit, Public Prosecution, and judicial police officers to promptly obtain the information referred to in this Article held by the relevant parties. . Take necessary measures to facilitate access by financial institutions and specified non-financial businesses and professions to beneficial ownership information and monitor it, for the purpose of implementing the provisions of Articles (10 and 11) of this Decision-Law.
5. Share ownership in the State shall be direct, and indirect ownership is prohibited.
6. Bearer shares are prohibited in the State.
7. Nominee directors are prohibited in the State.
8. Trustees or direct trusts must disclose their status to financial institutions and specified non-financial businesses and professions when establishing a customer relationship with them or conducting an occasional transaction, in accordance with Article (10) of this Decision-Law. Article (9) Risk-Based Approach Financial institutions and specified non-financial businesses and professions must do the following:
9. Identify, assess, understand, and monitor money laundering, terrorist financing, and proliferation financing risks, taking into account: . Results of any risk assessment conducted by the State. . All risk factors related to their customers, countries or geographic regions, products, services, transactions, and delivery channels, before determining the overall risk level and before determining the level and type of risk mitigation measures to be applied.
10. The nature and extent of money laundering, terrorist financing, and proliferation financing risk assessments must be commensurate with the nature and size of the businesses in financial institutions and specified non-financial businesses and professions.
11. Establish policies and controls, approved by senior management based on their risk assessment and any assessment conducted by the State, to manage and mitigate risks, including resource allocation, and the implementation of these controls must be monitored and enhanced as circumstances dictate.
12. Identify and assess money laundering, terrorist financing, and proliferation financing risks that may arise from developing new products, professional practices, or commercial practices, including risks related to new means of service delivery, and those arising from the use of new or developing technologies related to existing or new products. For this purpose, they must assess these risks before launching these products, practices, or technologies or using them, and take appropriate measures to manage and mitigate the resulting risks. .5 Document their risk assessment, update it, and automatically provide it to supervisory authorities. Article (10) Customer Due Diligence Measures

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1. Financial institutions and specified non-financial businesses and professions must take the following customer due diligence measures for permanent or occasional customers, whether natural, legal, or legal arrangements: . Not maintain anonymous accounts or accounts in fictitious names. . Identify their customers and verify their identities through reliable and independent documents, data, or records. . Verify that the person claiming to act on behalf of the customer is authorized to do so, identify them, and verify their identity. . Identify the beneficial owner and take reasonable measures to verify their identity using documents, information, or data obtained from a reliable and independent source, to the extent that the financial institution is satisfied that it knows the beneficial owner. . Understand the purpose and nature of the customer relationship and collect information about it as necessary. . Understand the nature of the customer's business when they are legal persons or legal arrangements, and their ownership and control structure. . Exercise ongoing due diligence on any customer relationship, including carefully studying the transactions being executed and their purpose to ensure they are consistent with the information held about their customers, their business activities, and their risk profile, including, if necessary, the source of funds, and ensuring that documents, data, or information collected are continuously updated and appropriate, through reviewing existing records, especially for high-risk customer categories.
2. Financial institutions and specified non-financial businesses and professions must apply these due diligence measures to their existing customers on the basis of materiality and risk since the date this Decision-Law enters into force, and take due diligence measures regarding existing customer relationships at appropriate times, taking into account whether due diligence measures were previously taken and when, and the adequacy of the data obtained.

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